Wrap Text
Unaudited group interim financial results for the period ended September 30, 2016
MiX Telematics Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1995/013858/06)
JSE share code: MIX NYSE code: MIXT ISIN: ZAE000125316
("MiX Telematics" or "the Company" or "the Group")
Unaudited Group interim financial results for the period ended September 30, 2016
Commentary
MiX Telematics announces financial results for second quarter and first half of fiscal 2017
References in this announcement to "R" are to South African Rand and references to "U.S. Dollars" and "$" are to
United States Dollars. Unless otherwise stated MiX Telematics has translated U.S. Dollar amounts from South African Rand at
the exchange rate of R13.8630 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at September 30, 2016.
Second quarter and first half highlights:
- Subscribers increased by 8% year over year, bringing the total to 585,000 subscribers at September 30, 2016
- Second quarter subscription revenue of R301 million ($22 million), grew 6% year over year
- Second quarter operating profit of R26 million ($2 million), representing a 7% margin
- Second quarter Adjusted EBITDA of R66 million ($5 million), representing an 18% Adjusted EBITDA margin
- First half subscription revenue of R608 million ($44 million), grew 9% year over year
- First half operating profit of R49 million ($4 million), representing a 7% margin
- First half Adjusted EBITDA of R127 million ($9 million), representing a 17% Adjusted EBITDA margin
Midrand, South Africa, November 3, 2016 - MiX Telematics Limited (NYSE: MIXT, JSE: MIX), a leading global provider of
fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), today announced financial results
for its second quarter and first half of fiscal 2017, which ended September 30, 2016.
"Our second quarter results were highlighted by improved activity from energy sector customers late in the quarter, as
well as ongoing momentum in some of our other vertical markets," said Stefan Joselowitz, Chief Executive Officer of MiX
Telematics. "We also continued to see more of our customers opt for fully-bundled contracts, increasing the long term
value of these relationships. Looking forward, we remain confident in our ability to manage our business to deliver
sustained profitable growth despite current macro headwinds in some of the geographies. We believe that the combination
of a growing subscriber base, expanding ARPU from premium customers, and a continued investment in the business, positions
MiX to re-accelerate performance in the second half of the year and beyond."
Financial performance for the three months ended September 30, 2016
Subscription revenue: Subscription revenue was R301.3 million ($21.7 million), an increase of 5.8% compared with
R284.9 million ($20.6 million) for the second quarter of fiscal 2016. Subscription revenue benefited from an increase of
over 43,600 subscribers, which resulted in an increase in the subscriber base of 8.1% from September 2015 to September 2016.
Total revenue: Total revenue was R368.2 million ($26.6 million), an increase of 2.8% compared to R358.3 million
($25.8 million) for the second quarter of fiscal 2016. Hardware and other revenue was R66.8 million ($4.8 million), a decrease
of 8.9% compared to R73.4 million ($5.3 million) for the second quarter of fiscal 2016. The decline in hardware and other
revenue is primarily attributable to the continued shift towards bundled deals.
Gross Margin: Gross profit was R253.1 million ($18.3 million), compared to R241.2 million ($17.4 million) for the
second quarter of fiscal 2016. Gross profit margin was 68.8%, compared to 67.3% for the second quarter of fiscal 2016. In
the second quarter of fiscal 2017 hardware margins were higher than those achieved in the second quarter of fiscal 2016.
These margins vary according to the geographic origin of the sale and the distribution channels through which the
hardware revenue was generated.
Operating Margin: Operating profit was R26.2 million ($1.9 million), compared to R27.2 million ($2.0 million) for the
second quarter of fiscal 2016. Operating margin was 7.1%, compared to 7.6% for the second quarter of fiscal 2016. The
decline relates to an increase in operating expenses primarily as a result of inflationary cost pressures predominantly
in South Africa. This offsets the improvement in gross margin described above.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was R66.2 million ($4.8 million), compared to R63.5 million
($4.6 million) for the second quarter of fiscal 2016. Adjusted EBITDA margin, a non-IFRS measure, for the second quarter
of fiscal 2017 was 18.0%, compared to 17.7% for the second quarter of fiscal 2016.
Profit for the period and earnings per share: Profit for the period was R23.2 million ($1.7 million), compared to
R79.7 million ($5.8 million) in the second quarter of fiscal 2016. Profit for the period includes a net foreign exchange
loss of R8.4 million ($0.6 million) before tax, primarily relating to U.S. Dollar cash reserves, which are sensitive to R:$
exchange rate movements. During the second quarter of fiscal 2016, profit for the period included a net foreign
exchange gain of R92.1 million ($6.6 million). Earnings per diluted ordinary share were four South African cents, compared
to 10 South African cents in the second quarter of fiscal 2016. For the second quarter of fiscal 2017, the calculation was
based on diluted weighted average ordinary shares in issue of 633.4 million compared to 799.2 million diluted weighted
average ordinary shares in issue during the second quarter of fiscal 2016. The diluted weighted average ordinary shares in
issue during the second quarter of fiscal 2017 were lower than in the second quarter of fiscal 2016, due to the
weighted average impact of the repurchase of 40.0 million ordinary shares in fiscal 2016 and the repurchase of 200.8 million
ordinary shares during the second quarter of fiscal 2017, as detailed below.
During the quarter the Company repurchased 200.8 million ordinary shares which were previously held by Imperial Corporate
Services Proprietary Limited ("Imperial Corporate Services") at R2.36 per repurchase share. These shares represented
25.01% of the Company's shares in issue. This share repurchase and related accounting treatment is fully described in
note 7 to the unaudited Group interim financial results for the six months ended September 30, 2016.
On a U.S. Dollar basis, and using the September 30, 2016 exchange rate of R13.8630 per U.S. Dollar, and at a ratio of
25 ordinary shares to one American Depositary Share ("ADS"), profit for the period were $1.7 million, or seven U.S. cents
per diluted ADS.
The Company's effective tax rate for the quarter was (15.4%) in comparison to 34.2% in the second quarter of fiscal 2016.
As described in note 18 to the unaudited Group interim financial results for the six months ended September 30, 2016, the
Company's effective tax rate has been affected by non-taxable foreign exchange movements. Ignoring the impact of net foreign
exchange gains and losses, and the related tax consequences, the effective tax rate, which is used in calculating adjusted
earnings, was 30.0% compared to 35.9% in the second quarter of fiscal 2016.
Adjusted earnings for the period and adjusted earnings per share: Adjusted earnings for the period, a non-IFRS
measure, was R20.0 million ($1.4 million) compared to the second quarter of fiscal 2016 when adjusted earnings for the period
was R18.8 million ($1.4 million) and excludes a net foreign exchange loss of R8.4 million ($0.6 million). During the
second quarter of fiscal 2016, a net foreign exchange gain of R92.1 million ($6.6 million) was recorded. Adjusted earnings
per diluted ordinary share, also a non-IFRS measure, were three South African cents, compared to two South African cents
in the second quarter of fiscal 2016.
On a U.S. Dollar basis, and using the September 30, 2016 exchange rate of R13.8630 per U.S. Dollar, and at a ratio of
25 ordinary shares to one ADS, adjusted earnings for the period were $1.4 million, or six U.S. cents per diluted ADS.
Statement of Financial Position and Cash Flow: At September 30, 2016, the Company had R311.3 million ($22.5 million)
of net cash and cash equivalents, compared to R885.9 million ($63.9 million) at September 30, 2015. The Company generated
R69.1 million ($5.0 million) in net cash from operating activities for the three months ended September 30, 2016 and
invested R85.0 million ($6.1 million) in capital expenditures during the quarter, leading to negative free cash flow of
R15.8 million ($1.1 million) for the second quarter of fiscal 2017, compared with free cash flow of R10.6 million
($0.8 million) for the second quarter of fiscal 2016. The Company utilized R488.8 million ($35.3 million) in financing
activities, compared to R171.4 million ($12.4 million) utilized during the second quarter of fiscal 2016. The cash utilized
in financing activities during the second quarter of fiscal 2017 includes share repurchases of R473.6 million ($34.2 million)
and dividends paid of R15.3 million ($1.1 million).
An explanation of non-IFRS measures used in this press release is set out in the Non-IFRS financial measures section
of this press release. A reconciliation of these non-IFRS measures to the most directly comparable IFRS measures is
provided in the financial tables that accompany this release.
Financial performance for the first half of fiscal 2017
Subscription revenue: Subscription revenue increased to R607.5 million ($43.8 million), up 9.1% from R556.7 million
($40.2 million) for the first half of fiscal 2016. Subscription revenue benefited from an increase of over 43,600
subscribers, which resulted in an increase in subscribers of 8.1% from September 2015 to September 2016.
Total revenue: Total revenue for the first half of fiscal 2017 was R747.3 million ($53.9 million), an increase of 6.4%
compared to R702.4 million ($50.7 million) for the first half of fiscal 2016. Hardware and other revenue was
R139.7 million ($10.1 million), compared to R145.7 million ($10.5 million) for the first half of fiscal 2016. The decline
in hardware and other revenue is primarily attributable to a shift towards bundled deals.
Gross margin: Gross profit for the first half of fiscal 2017 was R508.9 million ($36.7 million), an increase of 5.3%
compared to R483.1 million ($34.8 million) for the first half of fiscal 2016. Gross profit margin was 68.1%, down from
68.8% for the first half of fiscal 2016. As reported in our results announcement for the first quarter of fiscal 2017,
infrastructure costs have increased due to the Company commencing its transition from legacy data centers, where we owned
certain equipment, towards cloud-based infrastructure and services. We have also made additional investments to support
the rollout of our new back-end platform, MiX Lightning, and new products such as Journey Management, Hours of Service
and MiX Go, which will drive increased ARPU as well as subscriber growth over time. Our costs were also impacted by the
weaker Rand, which was particularly weak against the U.S. Dollar at the start of the financial year when annual licenses
were renewed.
Operating margin: Operating profit for the first half of fiscal 2017 was R49.1 million ($3.5 million), compared to
R59.8 million ($4.3 million) posted in the first half of fiscal 2016. The operating margin for the first half of fiscal
2017 was 6.6%, compared to the 8.5% posted in the first half of fiscal 2016. Part of the decline relates to the margin
contraction described above and the balance relates to an increase in operating expenses, primarily as a result of a weaker
South African Rand and inflation, mainly in South Africa.
Adjusted EBITDA: Adjusted EBITDA was R126.7 million ($9.1 million) compared to R128.6 million ($9.3 million) for the
first half of fiscal 2016. The Adjusted EBITDA margin for the first half of fiscal 2017 was 17.0%, compared with 18.3% in
the first half of fiscal 2016.
Profit for the period and earnings per share: Profit for the first half of fiscal 2017 was R55.1 million ($4.0 million),
compared to R110.8 million ($8.0 million) in the first half of fiscal 2016. Profit for the period includes a net foreign
exchange gain of R11.5 million ($0.8 million) before tax, primarily relating to U.S. Dollar cash reserves which are
sensitive to R:$ exchange rate movements. During the first half of fiscal 2016, a net foreign exchange gain of R103.1 million
($7.4 million) was recorded. Earnings per diluted ordinary share were eight South African cents, compared to 14 South African
cents in the first half of fiscal 2016. For the first half of fiscal 2017, the calculation was based on diluted weighted average
ordinary shares in issue of 697.9 million compared to 801.4 million diluted weighted average ordinary shares in issue during the
first half of fiscal 2016. The diluted weighted average ordinary shares in issue during the first half of fiscal 2017 were lower
than in the first half of fiscal 2016 due to the weighted average impact of the repurchase of 40.0 million ordinary shares in
fiscal 2016 and the repurchase of 200.8 million ordinary shares during the second quarter of fiscal 2017.
The Company's effective tax rate for the first half of fiscal 2017 was 19.1% in comparison to 33.5% in the first half of fiscal
2016. Ignoring the impact of net foreign exchange gains and losses, and related tax consequences, the effective tax rate, which
is used in calculating adjusted earnings, was 34.2% compared to 33.7% in the first half of fiscal 2016. Further information in
this regard is set out in note 18 to the unaudited Group interim financial results for the six months ended September 30, 2016.
Adjusted earnings for the period and adjusted earnings per share: Adjusted earnings for the first half of fiscal 2017,
a non-IFRS measure, was R37.3 million ($2.7 million), compared to R42.4 million ($3.1 million) in the first half of
fiscal 2016 and excludes a net foreign exchange gain of R11.5 million ($0.8 million). During the first half of fiscal 2016,
a net foreign exchange gain of R103.1 million ($7.4 million) was recorded. Adjusted earnings per diluted ordinary share
was five South African cents, consistent with the first half of fiscal 2016.
On a U.S. Dollar basis, and using the September 30, 2016 exchange rate of R13.8630 per U.S. Dollar, and at a ratio of
25 ordinary shares to one ADS, adjusted earnings for the first half of fiscal 2017 were $2.7 million, or 10 U.S. cents
per diluted ADS, compared to $3.1 million, or 10 U.S. cents per diluted ADS in the first half of fiscal 2016.
Cash Flow: The Company generated R97.2 million ($7.0 million) in net cash from operating activities for the first half
of fiscal 2017 and invested R147.2 million ($10.6 million) in capital expenditures during the period, leading to
negative free cash flow of R50.0 million ($3.6 million), compared with free cash flow of R7.6 million ($0.5 million) for the
first half of fiscal 2016. Capital expenditure was R48.0 million ($3.5 million) higher than in the first 6 months of
fiscal 2016 as a result of increased investments in in-vehicle devices due to the continued increase in the number of
bundled deals.
Segment commentary for the first half of fiscal 2017
The segment results below are presented on an integral margin basis. In respect of revenue, this method of measurement
entails reviewing the segmental results based on external revenue only. In respect of Adjusted EBITDA (the profit
measure identified by the Company), the margin generated by our Central Services Organization ("CSO"), net of any unrealized
intercompany profit, is allocated to the geographic region where the external revenue is recorded by our Regional Sales
Offices ("RSOs").
CSO continues as a central service organization that wholesales our products and services to our RSOs who, in turn, interface
with our end-customers and distributors. CSO is also responsible for the development of our hardware and software platforms
and provides common marketing, product management, technical and distribution support to each of our other operating segments.
CSO's operating expenses are not allocated to each RSO.
Each RSO's results reflect the external revenue earned, as well as the Adjusted EBITDA earned (or loss incurred) by each
operating segment before the CSO and corporate cost allocations.
For further information in this regard, please refer to note 3 of the unaudited Group interim financial results for
the six months ended September 30, 2016.
Segment Subscription Revenue % change on Total Revenue Adjusted EBITDA % change Adjusted EBITDA Margin
Half-year prior year Half-year on prior year Half-year
2017 2017 2017
R'000 R'000
Africa 374,377 6.6% 419,897 157,386 (2.3%) 37.5%
The subscriber base has grown by 10.8% since September 30, 2015. This resulted in subscription revenue growth of 6.6%
which was the primary driver of revenue growth in the segment. Total revenue increased by 4.9%. Adjusted EBITDA was
impacted by increased infrastructure costs related to the cost per subscriber, which had a dilutive impact on the gross
margin, while operating costs were subject to inflationary cost pressures in South Africa. As a result, Adjusted EBITDA
decreased by 2.3%.
Europe 59,097 16.3% 78,353 21,185 18.4% 27.0%
The region's subscriber base grew by 8.0% from September 30, 2015 and, in constant currency, subscription revenue growth
was 6.7%. Total revenue declined on a constant currency basis by 3.4% due to lower hardware revenues compared to the first
half of fiscal 2016. The region reported an increase of 18.4% in Adjusted EBITDA and an Adjusted EBITDA margin of 27.0%,
an improvement of 2.9%.
Americas 56,958 7.7% 78,361 13,713 226.9% 17.5%
The Americas segment subscriber base declined by 14.5% from September 30, 2015 due to customer fleet size contraction
mainly in the oil and gas vertical. Subscription revenue was however assisted by the market's preference for bundled deals
across new and existing customers. Consequently the subscription revenue decline was limited to 7.1% on a constant currency
basis. Total revenue declined by 8.4% on a constant currency basis as hardware sales were also lower. Adjusted EBITDA
increased by 226.9% with the segment delivering an Adjusted EBITDA margin of 17.5%. The improvement is primarily due to
stringent cost control measures, which have been implemented due to the current economic climate in the oil and gas sector.
Middle East and 102,271 9.5% 153,045 40,412 (6.4%) 26.4%
Australasia Subscribers decreased by 2.7% from September 30, 2015 while subscription revenue declined by 5.7% on a constant currency
basis. The overall decline in subscribers is attributable to continued economic headwinds experienced by the segment,
due to its primary focus being on the natural resources and oil and gas sectors. Total revenue in constant currency
declined by 8.4% as hardware revenue was also lower than in the first half of fiscal 2016. Lower revenue levels were the
primary cause of the 6.4% decline in Adjusted EBITDA.
Brazil 14,365 83.7% 17,157 4,351 - 25.4%
Subscribers increased by 41.0% since September 30, 2015 and subscription revenue, on a constant currency basis, increased
by 62.5%, due to an increase in the number of bundled subscriptions. On a constant currency basis, total revenue increased
by 59.7%.The segment reported positive Adjusted EBITDA of R4.4 million in the first half of fiscal 2017, at an Adjusted
EBITDA margin of 25.4%, compared to the first half of fiscal 2016, when the segment reported negative Adjusted EBITDA of
R2.2 million.
Central Services 443 7.8% 443 (64,354) (9.3%) -
Organization CSO is responsible for the development of our hardware and software platforms and provides common marketing, product
("CSO") management, technical and distribution support to each of our other operating segments. The negative Adjusted EBITDA
reported arises as a result of operating expenses carried by the segment.
Business Outlook
MiX Telematics has translated U.S. Dollar amounts in this Business Outlook paragraph from South African Rand at the
exchange rate of R13.6539 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at October 31, 2016.
Based on information as of today, November 3, 2016, the Company is issuing the following financial guidance for the
full 2017 fiscal year:
- Subscription revenue - R1,220 million to R1,230 million ($89 million to $90 million), which would represent
subscription revenue growth of 5% to 6% compared to fiscal 2016.
- Total revenue - R1,501 million to R1,525 million ($110 million to $112 million), which would represent revenue
growth of 2% to 4% compared to fiscal 2016.
- Adjusted EBITDA - R270 million to R290 million ($20 million to $21 million), which would result in a decline of 3%
at the lower end and 5% growth at the higher end compared to fiscal 2016 Adjusted EBITDA.
- Adjusted earnings per diluted ordinary share of 11.8 to 13.8 South African cents based on 632 million diluted
ordinary shares in issue, and based on an effective tax rate of 32.0% to 34.0%. At a ratio of 25 ordinary shares to
one ADS, this equates to adjusted earnings per diluted ADS of 22 to 25 U.S. cents.
For the third quarter of fiscal 2017, the Company expects subscription revenue to be in the range of R303 million to
R308 million ($22 million to $23 million) which would represent subscription revenue growth of 3% to 5% compared to the
third quarter of fiscal 2016.
The key assumptions used in deriving the forecast are as follows:
- Growth in subscription revenue and vehicles under subscription are based on expected growth rates related to market
conditions and takes into account growth rates achieved previously.
- Achieving hardware sales according to expectations. Hardware sales are dependent on the volumes of bundled
solutions selected by customers.
- An average forecast exchange rate for the 2017 fiscal year of R14.2000 per $1.00.
The forecast is the responsibility of the board of directors and has not been reviewed or reported on by the Company's
external auditors. The Company's policy is to give guidance on a quarterly basis, if necessary, and does not update
guidance between quarters.
The information disclosed in this "Business Outlook" paragraph complies with the disclosure requirements in terms of
paragraph 8.38 of the JSE Listings Requirements which deals with profit forecasts.
Quarterly Reporting Policy in respect of JSE Listings Requirements
Following the listing of the Company's ADSs on the New York Stock Exchange, the Company has adopted a quarterly
reporting policy. As a result of such quarterly reporting the Company is, in terms of paragraph 3.4(b)(ix) of the JSE Listings
Requirements, not required to publish trading statements in terms of paragraph 3.4(b)(i) to (viii) of the JSE Listings
Requirements.
Conference Call Information
MiX Telematics management will also host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and
2:00 p.m. (South African Time) on November 3, 2016 to discuss the Company's financial results and current business
outlook:
- The live webcast of the call will be available at the "Investor Information" page of the Company's website,
https://investor.mixtelematics.com.
- To access the call, dial 1-888-539-3679 (within the United States) or 0 800 999 558 (within South Africa) or
1-719-457-2637 (outside of the United States). The conference ID is 5512239.
- A replay of this conference call will be available for a limited time at 1-877-870-5176 (within the United States)
or 1-858-384-5517 (within South Africa or outside of the United States). The replay conference ID is 5512239.
- A replay of the webcast will also be available for a limited time at https://investor.mixtelematics.com.
About MiX Telematics Limited
MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to
customers managing 585,000 assets in approximately 120 countries. The Company's products and services provide enterprise
fleets, small fleets and consumers with solutions for safety, efficiency, risk and security. MiX Telematics was founded in
1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania, Thailand
and the United Arab Emirates as well as a network of more than 130 fleet partners worldwide. MiX Telematics shares are
publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX Telematics American Depositary Shares are listed on
the New York Stock Exchange (NYSE: MIXT). For more information visit www.mixtelematics.com.
Forward-Looking Statements
This press release includes certain "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, including without limitation, statements concerning our financial guidance for the third quarter
and full year of fiscal 2017, our position to execute on our growth strategy, and our ability to expand our leadership
position. These forward-looking statements reflect our current views about our plans, intentions, expectations,
strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Actual
results may differ materially from those described in the forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control including, without limitation, those described under the caption "Risk
Factors" in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission (the "SEC") for the
fiscal year ended March 31, 2016, as updated by other reports that the Company files with or furnishes to the SEC. The
Company assumes no obligation to update any forward-looking statements contained in this press release as a result of new
information, future events or otherwise.
Non-IFRS financial measures
Adjusted EBITDA
To provide investors with additional information regarding its financial results, the Company has disclosed within
this press release, Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is a non-IFRS financial measure; it does
not represent cash flows from operations for the periods indicated and should not be considered an alternative to profit
for the period as an indicator of the Company's results of operations or as an alternative to cash flows from operations
as an indicator of liquidity. Adjusted EBITDA is defined as the profit for the period before income taxes, net finance
income/(costs) including foreign exchange gains/(losses), depreciation of property, plant and equipment including
capitalized customer in-vehicle devices, amortization of intangible assets including capitalized in-house development
costs and intangible assets identified as part of a business combination, share-based compensation costs, transaction costs
arising from the acquisition of a business or investigating strategic alternatives, restructuring costs, profits/(losses)
on the disposal or impairments of assets or subsidiaries, certain non-recurring initial public offering ("IPO") costs,
insurance reimbursements relating to impaired assets and certain litigation costs.
The Company has included Adjusted EBITDA and Adjusted EBITDA margin in this press release because they are key measures
that the Company's management and Board of Directors use to understand and evaluate its core operating performance and
trends; to prepare and approve its annual budget; and to develop short- and long-term operational plans. In particular,
the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA margin can provide a useful
measure for period-to-period comparisons of the Company's core business. Accordingly, the Company believes that Adjusted
EBITDA and Adjusted EBITDA margin provides useful information to investors and others in understanding and evaluating its
operating results.
The Company's use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance
measure in isolation from or as a substitute for analysis of the Company's results as reported under IFRS. Some of
these limitations are:
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to
be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such
replacements or for new capital expenditure requirements;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
- Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company; and
- other companies, including companies in the Company's industry, may calculate Adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures,
including operating profit, profit for the period and the Company's other results.
Headline Earnings
Headline earnings is a profit measure required for JSE-listed companies and is calculated in accordance with circular
2/2015 issued by the South African Institute of Chartered Accountants. The profit measure is determined by taking the
profit for the period prior to certain separately identifiable re-measurements of the carrying amount of an asset or
liability that arose after the initial recognition of such asset or liability net of related tax (both current and deferred)
and related non-controlling interest.
Adjusted Earnings and Adjusted Earnings Per Share
Adjusted earnings per share is defined as profit attributable to owners of the parent, MiX Telematics Limited,
excluding net foreign exchange gains/(losses) net of tax, divided by the weighted average number of ordinary shares in issue
during the period.
We have included Adjusted earnings per share in this press release because it provides a useful measure for
period-to-period comparisons of the Company's core business by excluding net foreign exchange gains/(losses) from earnings.
Accordingly, we believe that Adjusted earnings per share provides useful information to investors and others in understanding
and evaluating the Company's operating results.
Free cash flow
Free cash flow is determined as net cash generated from operating activities less capital expenditure per investing
activities. We believe that free cash flow provides useful information to investors and others in understanding and
evaluating the Company's cash flows as it provides detail of the amount of cash the Company generates or utilizes after
accounting for all capital expenditures including investments in in-vehicle devices and development expenditure.
Constant currency and U.S. Dollar financial information
Financial information presented in United States Dollars ("U.S. Dollars" and "$") and constant currency financial
information presented as part of the segment commentary constitute pro forma financial information under the JSE Listings
Requirements. Unless otherwise stated, MiX Telematics has translated U.S. Dollar amounts from South African Rand ("R") at
the exchange rate of R13.8630 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at September 30, 2016.
Constant currency information has been presented to illustrate the impact of changes in currency rates on the Company's
results. The constant currency information has been determined by adjusting the current financial reporting period
results to the prior period average exchange rates, determined as the average of the monthly exchange rates applicable
to the period. The measurement has been performed for each of the Company's currencies, including the U.S. Dollar and
British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results
compared to the prior period results.
This pro forma financial information is the responsibility of the Company's board of directors and is presented for
illustrative purposes. Because of its nature, the pro forma financial information may not fairly present MiX Telematics'
financial position, changes in equity, results of operations or cash flows. The pro forma financial information does not
constitute pro forma information in accordance with the requirements of Regulation S-X of the SEC or generally accepted
accounting principles in the United States. In addition, the rules and regulations related to the preparation of pro
forma financial information in other jurisdictions may also vary significantly from the requirements applicable in South
Africa. The information contained in this report has not been reviewed or audited by the Company's auditors.
Investor Contact:
Seth Potter
ICR for MiX Telematics
ir@mixtelematics.com
1-855-564-9835
JSE Sponsor:
Java Capital
Unaudited interim financial results for the six months ended September 30, 2016
Condensed consolidated income statements
South African Rand
Figures are in thousands unless Six months Six months Three months Three months
otherwise stated ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Revenue 747,256 702,382 368,160 358,254
Cost of sales (238,369) (219,280) (115,050) (117,034)
Gross profit 508,887 483,102 253,110 241,220
Other income/(expenses) - net 530 343 71 941
Operating expenses (460,321) (423,675) (226,955) (214,958)
- Sales and marketing (97,652) (94,884) (49,122) (48,303)
- Administration and other charges (362,669) (328,791) (177,833) (166,655)
Operating profit 49,096 59,770 26,226 27,203
Finance income/(costs) - net 18,995 106,840 (6,120) 93,883
- Finance income 23,082 107,627 6,102 94,316
- Finance costs (4,087) (787) (12,222) (433)
Profit before taxation 68,091 166,610 20,106 121,086
Taxation (12,973) (55,814) 3,092 (41,361)
Profit for the period 55,118 110,796 23,198 79,725
Attributable to:
Owners of the parent 55,130 111,120 23,205 79,882
Non-controlling interests (12) (324) (7) (157)
55,118 110,796 23,198 79,725
Earnings per share
- basic (R) 0.08 0.14 0.04 0.10
- diluted (R) 0.08 0.14 0.04 0.10
Earnings per American Depositary Share
- basic (R) 1.98 3.51 0.92 2.53
- diluted (R) 1.97 3.47 0.92 2.50
Ordinary shares ('000)1
- in issue at September 30 562,259 763,976 562,259 763,976
- weighted average 695,746 790,782 632,113 788,748
- diluted weighted average 697,920 801,435 633,413 799,226
Weighted average American Depositary Shares ('000)1
- in issue at September 30 22,490 30,559 22,490 30,559
- weighted average 27,830 31,631 25,285 31,550
-diluted weighted average 27,917 32,057 25,337 31,969
1 Excludes 40,000,000 treasury shares (September 2015: 29,348,850) held by MiX Telematics Investments Proprietary
Limited ("MiX Investments"). The September 2015 comparative also excluded 250,000 treasury shares that were held
in terms of the TeliMatrix Group Executive Incentive Scheme ("the Plan") on behalf of a plan participant.
Condensed consolidated income statements
United States Dollar
Figures are in thousands unless Six months Six months Three months Three months
otherwise stated ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Revenue 53,903 50,666 26,557 25,842
Cost of sales (17,195) (15,818) (8,299) (8,442)
Gross profit 36,708 34,848 18,258 17,400
Other income/(expenses) - net 38 25 5 68
Operating expenses (33,205) (30,561) (16,371) (15,506)
- Sales and marketing (7,044) (6,844) (3,543) (3,484)
- Administration and other charges (26,161) (23,717) (12,828) (12,022)
Operating profit 3,541 4,312 1,892 1,962
Finance income/(costs) - net 1,370 7,707 (442) 6,772
- Finance income 1,665 7,764 440 6,803
- Finance costs (295) (57) (882) (31)
Profit before taxation 4,911 12,019 1,450 8,734
Taxation (936) (4,026) 223 (2,984)
Profit for the period 3,975 7,993 1,673 5,750
Attributable to:
Owners of the parent 3,976 8,016 1,674 5,761
Non-controlling interests (1) (23) (1) (11)
3,975 7,993 1,673 5,750
Earnings per share
- basic ($) 0.01 0.01 # 0.01
- diluted ($) 0.01 0.01 # 0.01
Earnings per American Depositary Share
- basic ($) 0.14 0.25 0.07 0.18
- diluted ($) 0.14 0.25 0.07 0.18
Ordinary shares ('000)1
- in issue at September 30 562,259 763,976 562,259 763,976
- weighted average 695,746 790,782 632,113 788,748
- diluted weighted average 697,920 801,435 633,413 799,226
Weighted average American Depositary Shares ('000)1
- in issue at September 30 22,490 30,559 22,490 30,559
- weighted average 27,830 31,631 25,285 31,550
- diluted weighted average 27,917 32,057 25,337 31,969
# Amounts less than $0.01
1 Excludes 40,000,000 treasury shares (September 2015: 29,348,850) held by MiX Investments. The September 2015
comparative also excluded 250,000 treasury shares that were held in terms of the TeliMatrix Group Executive Incentive
Scheme ("the Plan") on behalf of a plan participant.
Condensed consolidated statements of comprehensive income
South African Rand United States Dollar
Figures are in thousands unless otherwise stated Six months Six months Six months Six months
ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Profit for the period 55,118 110,796 3,975 7,993
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations (42,962) 55,694 (3,099) 4,017
- Attributable to owners of the parent (42,914) 55,578 (3,096) 4,009
- Attributable to non-controlling interests (48) 116 (3) 8
Exchange differences on net investments in foreign operations (15,657) 11,351 (1,129) 819
Taxation relating to components of other comprehensive income 478 (587) 34 (42)
Other comprehensive (loss)/income for the period, net of tax (58,141) 66,458 (4,194) 4,794
Total comprehensive (loss)/income for the period (3,023) 177,254 (219) 12,787
Attributable to:
Owners of the parent (2,963) 177,462 (215) 12,802
Non-controlling interests (60) (208) (4) (15)
Total comprehensive (loss)/income for the period (3,023) 177,254 (219) 12,787
Headline earnings
Reconciliation of headline earnings
South African Rand United States Dollar
Figures are in thousands unless otherwise stated Six months Six months Six months Six months
ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Profit for the period attributable to owners of the parent 55,130 111,120 3,976 8,016
Adjusted for:
Loss/(profit) on disposal of property, plant and equipment
and intangible assets 17 (116) 1 (8)
Impairment of product development costs capitalized 144 - 10 -
Income tax effect on the above components (23) 16 (2) 1
Headline earnings attributable to owners of the parent 55,268 111,020 3,985 8,009
Headline earnings
Headline earnings per share
- basic (R/$) 0.08 0.14 0.01 0.01
- diluted (R/$) 0.08 0.14 0.01 0.01
Headline earnings per American Depositary Share
- basic (R/$) 1.99 3.51 0.14 0.25
- diluted (R/$) 1.98 3.46 0.14 0.25
Adjusted earnings
Reconciliation of adjusted earnings
South African Rand
Figures are in thousands unless otherwise stated Six months Six months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Profit for the period attributable to owners of the parent 55,130 111,120 23,205 79,882
Net foreign exchange (gains)/losses (11,496) (103,138) 8,421 (92,094)
Income tax effect on the above component (6,381) 34,442 (11,637) 30,960
Adjusted earnings attributable to owners of the parent 37,253 42,424 19,989 18,748
Adjusted earnings
Adjusted earnings per share
- basic (R) 0.05 0.05 0.03 0.02
- diluted (R) 0.05 0.05 0.03 0.02
Adjusted earnings per American Depositary Share
- basic (R) 1.34 1.34 0.79 0.59
- diluted (R) 1.33 1.32 0.79 0.59
United States Dollar
Figures are in thousands unless otherwise stated
Profit for the period attributable to owners of the parent 3,976 8,016 1,674 5,761
Net foreign exchange (gains)/losses (829) (7,440) 607 (6,643)
Income tax effect on the above component (460) 2,484 (839) 2,233
Adjusted earnings attributable to owners of the parent 2,687 3,060 1,442 1,351
Adjusted earnings per share
- basic ($) # # # #
- diluted ($) # # # #
Adjusted earnings per American Depositary Share
- basic ($) 0.10 0.10 0.06 0.04
- diluted ($) 0.10 0.10 0.06 0.04
# Amounts less than $0.01
Condensed consolidated statements of financial position
South African Rand United States Dollar
Figures are in thousands unless otherwise stated September 30, March 31, September 30, March 31,
2016 2016 2016 2016
Unaudited Audited Unaudited Unaudited
ASSETS
Non-current assets
Property, plant and equipment 277,442 235,584 20,013 16,994
Intangible assets 845,804 846,851 61,012 61,087
Available-for-sale financial asset - - - -
Finance lease receivable 60 167 4 12
Deferred tax assets 35,895 30,005 2,589 2,164
Total non-current assets 1,159,201 1,112,607 83,618 80,257
Current assets
Inventory 45,942 64,489 3,314 4,652
Trade and other receivables 277,628 293,045 20,027 21,139
Finance lease receivable 271 984 20 71
Taxation (note 18) 21,651 8,886 1,562 641
Restricted cash 13,945 21,134 1,006 1,524
Cash and cash equivalents 346,873 877,136 25,021 63,272
Total current assets 706,310 1,265,674 50,950 91,299
Total assets 1,865,511 2,378,281 134,568 171,556
EQUITY
Stated capital (note 7) 851,802 1,320,955 61,444 95,286
Other reserves 21,604 74,262 1,558 5,357
Retained earnings 550,723 526,082 39,726 37,949
Equity attributable to owners of the parent 1,424,129 1,921,299 102,728 138,592
Non-controlling interest (1,551) (1,491) (112) (108)
Total equity 1,422,578 1,919,808 102,616 138,484
LIABILITIES
Non-current liabilities
Deferred tax liabilities (note 18) 109,882 120,981 7,926 8,727
Provisions 2,498 3,514 180 253
Share-based payment liability - - - -
Total non-current liabilities 112,380 124,495 8,106 8,980
Current liabilities
Trade and other payables 264,600 282,647 19,088 20,389
Borrowings 368 1,103 27 80
Taxation 10,654 2,795 769 202
Provisions (note 11) 19,386 31,059 1,398 2,240
Bank overdraft 35,545 16,374 2,564 1,181
Total current liabilities 330,553 333,978 23,846 24,092
Total liabilities 442,933 458,473 31,952 33,072
Total equity and liabilities 1,865,511 2,378,281 134,568 171,556
Net cash (note 6) 310,960 859,659 22,430 62,011
Net asset value per share (R/$) 2.53 2.53 0.18 0.18
Net tangible asset value per share (R/$) 1.03 1.42 0.07 0.10
Capital expenditure
- incurred 146,638 252,734 10,578 18,231
- authorized but not spent 65,957 119,375 4,758 8,611
Condensed consolidated statements of cash flows
South African Rand United States Dollar
Figures are in thousands unless Six months Six months Six months Six months
otherwise stated ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Operating activities
Cash generated from operations 124,340 136,634 8,969 9,856
Net financing income 7,666 3,632 553 262
Taxation paid (34,792) (33,513) (2,510) (2,417)
Net cash generated from operating activities 97,214 106,753 7,012 7,701
Cash flows from investing activities
Capital expenditure payments (147,187) (99,195) (10,617) (7,155)
Deferred consideration paid (735) (664) (53) (48)
Proceeds on sale of property, plant and
equipment and intangible assets 198 420 14 30
Contingent consideration paid - (18,000) - (1,298)
Decrease in restricted cash 3,765 18,845 272 1,359
Increase in restricted cash (566) - (41) -
Net cash used in investing activities (144,525) (98,594) (10,425) (7,112)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 4,529 555 327 40
Share repurchase (473,601) (92,684) (34,163) (6,686)
Repayment of borrowings - (41) - (3)
Dividends paid to Company's owners (30,458) (79,193) (2,197) (5,713)
Net cash used in financing activities (499,530) (171,363) (36,033) (12,362)
Net decrease in cash and cash equivalents (546,841) (163,204) (39,446) (11,773)
Net cash and cash equivalents at the beginning of
the period 860,762 927,415 62,091 66,899
Exchange (losses)/gains on cash and cash equivalents (2,593) 121,676 (188) 8,777
Net cash and cash equivalents at the end of the period 311,328 885,887 22,457 63,903
Free cash flow
Reconciliation of free cash flow to net cash generated from operating activities
South African Rand
Figures are in thousands unless otherwise stated Six months Six months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Net cash generated from operating activities 97,214 106,753 69,113 71,562
Capital expenditure payments (147,187) (99,195) (84,960) (60,918)
Free cash flow (49,973) 7,558 (15,847) 10,644
United States Dollar
Figures are in thousands unless otherwise stated
Net cash generated from operating activities 7,012 7,701 4,985 5,162
Capital expenditure payments (10,617) (7,155) (6,129) (4,394)
Free cash flow (3,605) 546 (1,144) 768
Condensed consolidated statement of changes in equity
Attributable to owners of the parent
South African Rand Non-
Figures are in thousands unless Stated Other Retained controlling Total
otherwise stated capital reserves earnings Total interest equity
Balance at April 1, 2015 (Audited) 1,436,993 (21,894) 450,347 1,865,446 (874) 1,864,572
Total comprehensive income - 66,342 111,120 177,462 (208) 177,254
Profit for the period - - 111,120 111,120 (324) 110,796
Other comprehensive income - 66,342 - 66,342 116 66,458
Transactions with owners (92,129) 3,438 (79,295) (167,986) - (167,986)
Shares issued in relation to share
options exercised 555 - - 555 - 555
Share-based payment - 3,438 - 3,438 - 3,438
Dividends declared - - (79,295) (79,295) - (79,295)
Share repurchase (92,684) - - (92,684) - (92,684)
Balance at September 30, 2015 (Unaudited) 1,344,864 47,886 482,172 1,874,922 (1,082) 1,873,840
Total comprehensive income - 21,976 71,869 93,845 (409) 93,436
Profit for the period - - 71,869 71,869 (174) 71,695
Other comprehensive income - 21,976 - 21,976 (235) 21,741
Transactions with owners (23,909) 4,400 (27,959) (47,468) - (47,468)
Shares issued in relation to share
options exercised 7,167 - - 7,167 - 7,167
Share-based payment - 4,400 - 4,400 - 4,400
Dividends declared - - (27,959) (27,959) - (27,959)
Share repurchase (31,076) - - (31,076) - (31,076)
Balance at March 31, 2016 (Audited) 1,320,955 74,262 526,082 1,921,299 (1,491) 1,919,808
Total comprehensive income - (58,093) 55,130 (2,963) (60) (3,023)
Profit for the period - - 55,130 55,130 (12) 55,118
Other comprehensive loss - (58,093) - (58,093) (48) (58,141)
Transactions with owners (469,153) 5,435 (30,489) (494,207) - (494,207)
Shares issued in relation to share
options exercised 4,529 - - 4,529 - 4,529
Share-based payment - 5,435 - 5,435 - 5,435
Dividends declared (note 8) - - (30,489) (30,489) - (30,489)
Share repurchase (note 7) (473,682) - - (473,682) - (473,682)
Balance at September 30, 2016 (Unaudited) 851,802 21,604 550,723 1,424,129 (1,551) 1,422,578
Condensed consolidated statement of changes in equity
Attributable to owners of the parent
United States Dollar Non-
Figures are in thousands unless Stated Other Retained controlling Total
otherwise stated capital reserves earnings Total interest equity
Balance at April 1, 2015 (Unaudited) 103,657 (1,579) 32,486 134,564 (63) 134,501
Total comprehensive income - 4,786 8,016 12,802 (15) 12,787
Profit for the period - - 8,016 8,016 (23) 7,993
Other comprehensive income - 4,786 - 4,786 8 4,794
Transactions with owners (6,646) 248 (5,720) (12,118) - (12,118)
Shares issued in relation to share
options exercised 40 - - 40 - 40
Share-based payment - 248 - 248 - 248
Dividends declared - - (5,720) (5,720) - (5,720)
Share repurchase (6,686) - - (6,686) - (6,686)
Balance at September 30, 2015 (Unaudited) 97,011 3,455 34,782 135,248 (78) 135,170
Total comprehensive income - 1,585 5,184 6,769 (30) 6,739
Profit for the period - - 5,184 5,184 (13) 5,171
Other comprehensive income - 1,585 - 1,585 (17) 1,568
Transactions with owners (1,725) 317 (2,017) (3,425) - (3,425)
Shares issued in relation to share
options exercised 517 - - 517 - 517
Share-based payment - 317 - 317 - 317
Dividends declared - - (2,017) (2,017) - (2,017)
Share repurchase (2,242) - - (2,242) - (2,242)
Balance at March 31, 2016 (Unaudited) 95,286 5,357 37,949 138,592 (108) 138,484
Total comprehensive income - (4,191) 3,976 (215) (4) (219)
Profit for the period - - 3,976 3,976 (1) 3,975
Other comprehensive loss - (4,191) - (4,191) (3) (4,194)
Transactions with owners (33,842) 392 (2,199) (35,649) - (35,649)
Shares issued in relation to share
options exercised 327 - - 327 - 327
Share-based payment - 392 - 392 - 392
Dividends declared (note 8) - - (2,199) (2,199) - (2,199)
Share repurchase (note 7) (34,169) - - (34,169) - (34,169)
Balance at September 30, 2016 (Unaudited) 61,444 1,558 39,726 102,728 (112) 102,616
Other reserves comprise the following:
South African Rand United States Dollar
Figures are in thousands unless otherwise stated September 30, March 31, September 30, March 31,
2016 2016 2016 2016
Unaudited Audited Unaudited Unaudited
Foreign currency translation 110,941 153,855 8,002 11,099
Reserve on transaction with non-controlling interest (137,438) (137,438) (9,914) (9,914)
Share-based payments 33,454 28,019 2,413 2,021
Shareholder loan revaluation 14,647 29,826 1,057 2,151
Closing balance 21,604 74,262 1,558 5,357
NOTES TO CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Basis of preparation and accounting policies
Condensed unaudited Group interim financial results for the half year ended September 30, 2016
These condensed unaudited Group interim financial results for the half year ended September 30, 2016 have been
prepared in accordance with International Financial Reporting Standard (IAS) 34: Interim financial reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the
Financial Reporting Standards Council (FRSC), the JSE Listings Requirements and the requirements of the South African
Companies Act, No. 71 of 2008. The interim financial results have not been audited or reviewed by the Group's external
auditors.
The condensed unaudited Group interim financial results do not include all the information and disclosures required in
the annual financial statements and should be read in conjunction with the Group's annual financial statements for the
year ended March 31, 2016, which have been prepared in accordance with IFRS.
The preparation of interim financial results requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses.
In preparing these condensed interim financial results, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation and uncertainty were the same as those applied to the
consolidated financial statements for the year ended March 31, 2016.
The condensed unaudited Group interim financial results were prepared under the supervision of the Chief Financial
Officer, ML Pydigadu CA(SA).
The Group has adopted all the new, revised or amended accounting pronouncements as issued by the International
Accounting Standards Board (IASB) which were effective for the Group from April 1, 2016, none of which had a material
impact on the Group.
Financial results for the second quarter of fiscal 2017
In addition to the condensed unaudited Group interim financial results for the half year ended September 30, 2016,
additional financial information in respect of the second quarter of fiscal 2017 has been presented together with the
relevant comparative information. The quarterly information comprises a condensed consolidated income statement, a
reconciliation of adjusted earnings to profit for the period, a reconciliation of Adjusted EBITDA to profit for the period
(note 4) and other financial and operating data (note 12).
The quarterly financial results have not been audited or reviewed by the Group's external auditors.
The condensed unaudited Group quarterly financial results do not include all the information and disclosures required
in the annual financial statements and should be read in conjunction with the Group's annual financial statements for
the year ended March 31, 2016, which have been prepared in accordance with IFRS.
Presentation currency and convenience translation
The Group's presentation currency is South African Rand. In addition to presenting these interim financial results in
South African Rand, supplementary information in U.S. Dollars has been prepared for the convenience of users of the
Group interim financial results. Unless otherwise stated, the Group has translated U.S. Dollar amounts from South African
Rand at the exchange rate of R13.8630 per $1.00, which was the R/$ exchange rate reported by Oanda.com as at September 30,
2016. The U.S. Dollar figures may not compute as they are rounded independently.
The supplementary information prepared in U.S. Dollars constitutes pro forma financial information under the JSE Listings
Requirements. This pro forma financial information is the responsibility of the Group's Board of Directors and is
presented for illustrative purposes. Because of its nature, the pro forma financial information may not fairly present MiX
Telematics' financial position, changes in equity, results of operations or cash flows. The pro forma financial
information does not constitute pro forma information in accordance with the requirements of Regulation S-X of the SEC or
generally accepted accounting principles in the United States. In addition, the rules and regulations related to the
preparation of pro forma financial information in other jurisdictions may also vary significantly from the requirements
applicable in South Africa.
2. Accounting policies
The accounting policies used in preparing these financial results are in terms of IFRS and are consistent in all material
respects with those applied in the preparation of the Group's annual financial statements for the year ended March 31, 2016.
3. Segment information
Our operating segments are based on the geographical location of our Regional Sales Offices ("RSOs") and also include
our Central Services Organization ("CSO"). CSO is our central services organization that wholesales our products and
services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for
the development of our hardware and software platforms and provides common marketing, product management, technical and
distribution support to each of our other operating segments.
While our operating segments have remained consistent in fiscal 2017 compared to prior years, the basis of measurement
for revenues and Adjusted EBITDA was changed in the second half of fiscal 2016. The chief operating decision maker
("CODM") reviews the segment results on an integral margin basis as defined by management. Previously, the margin (and the
revenue) generated by CSO due to intercompany transactions, was recognized at the CSO level with a corresponding cost
recognized in the respective geographic segment. Management have eliminated those intercompany profits such that CSO no
longer reflects the intercompany margin and the RSOs have recognized all of the revenue relating to activity generated in
their region with an allocated portion of the margin from CSO (net of intercompany unrealized profits) for that region.
The costs remaining in CSO relate mainly to research and development of hardware and software platforms, common
marketing, product management and technical and distribution support to each of the RSOs. CSO continues to be a reportable
segment of the Group because it produces discrete financial information which is reviewed by the CODM and has the ability to
generate external revenues.
Each operating segment's results reflect the external revenue earned, as well as the Adjusted EBITDA earned (or loss
incurred) by each operating segment before the remaining CSO and corporate cost allocations. This is consistent with the
manner in which segment information is reviewed by the CODM. Segment assets are not disclosed as segment information is
no longer reviewed on such a basis by the CODM.
The tables below present the segment information on this revised measurement basis, with the prior period amended to
conform to the current period presentation as shown below. This revised measurement basis was used in our consolidated
financial statements for the year ended March 31, 2016.
South African Rand
Figures are in thousands unless otherwise stated Subscription Hardware and Total Adjusted
revenue other revenue revenue EBITDA
Six months ended September 30, 2016 (unaudited)
Africa 374,377 45,520 419,897 157,386
Europe 59,097 19,256 78,353 21,185
Americas 56,958 21,403 78,361 13,713
Middle East and Australasia 102,271 50,774 153,045 40,412
Brazil 14,365 2,792 17,157 4,351
Total Regional Sales Offices 607,068 139,745 746,813 237,047
Central Services Organization 443 - 443 (64,354)
Total Segment Results 607,511 139,745 747,256 172,693
Corporate and consolidation entries - - - (46,014)
Total 607,511 139,745 747,256 126,679
Six months ended September 30, 2015 (unaudited) Subscription Hardware and Total Adjusted
revenue other revenue revenue EBITDA
Restated
Africa 351,354 48,850 400,204 161,088
Europe 50,808 23,909 74,717 17,892
Americas 52,878 20,862 73,740 4,195
Middle East and Australasia 93,396 50,414 143,810 43,194
Brazil 7,821 1,679 9,500 (2,176)
Total Regional Sales Offices 556,257 145,714 701,971 224,193
Central Services Organization 411 - 411 (58,899)
Total Segment Results 556,668 145,714 702,382 165,294
Corporate and consolidation entries - - - (36,740)
Total 556,668 145,714 702,382 128,554
United States Dollar
Figures are in thousands unless otherwise stated Subscription Hardware and Total Adjusted
revenue other revenue revenue EBITDA
Six months ended September 30, 2016 (unaudited)
Africa 27,005 3,283 30,288 11,353
Europe 4,263 1,389 5,652 1,528
Americas 4,109 1,544 5,653 989
Middle East and Australasia 7,377 3,663 11,040 2,915
Brazil 1,036 202 1,238 314
Total Regional Sales Offices 43,790 10,081 53,871 17,099
Central Services Organization 32 - 32 (4,642)
Total Segment Results 43,822 10,081 53,903 12,457
Corporate and consolidation entries - - - (3,319)
Total 43,822 10,081 53,903 9,138
Six months ended September 30, 2015 (unaudited) Subscription Hardware and Total Adjusted
revenue other revenue revenue EBITDA
Restated
Africa 25,345 3,523 28,868 11,620
Europe 3,665 1,725 5,390 1,291
Americas 3,814 1,505 5,319 303
Middle East and Australasia 6,737 3,637 10,374 3,116
Brazil 564 121 685 (157)
Total Regional Sales Offices 40,125 10,511 50,636 16,173
Central Services Organization 30 - 30 (4,249)
Total Segment Results 40,155 10,511 50,666 11,924
Corporate and consolidation entries - - (2,651)
Total 40,155 10,511 50,666 9,273
4. Reconciliation of Adjusted EBITDA to Profit for the Period
South African Rand Six months Six months Three months Three months
Figures are in thousands unless otherwise stated ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Adjusted EBITDA 126,679 128,554 66,230 63,453
Add:
Decrease in restructuring cost provision 431 1,088 - 450
Less:
Depreciation(1) (45,525) (33,809) (24,586) (17,239)
Amortization(2) (25,829) (27,557) (12,297) (14,573)
Impairment of product development costs capitalized (144) - (144) -
Share-based compensation costs (6,499) (3,438) (3,020) (1,862)
Equity-settled share-based compensation costs (5,435) (3,438) (3,020) (1,862)
Cash-settled share-based compensation costs (1,064) - - -
Net (loss)/profit on sale of property, plant and
equipment and intangible assets (17) (116) 43 (114)
Transaction costs arising from investigating
strategic alternatives - (4,952) - (2,912)
Operating profit 49,096 59,770 26,226 27,203
Add: Finance income/(costs) - net 18,995 106,840 (6,120) 93,883
Less: Taxation (12,973) (55,814) 3,092 (41,361)
Profit for the period 55,118 110,796 23,198 79,725
(1) Includes depreciation of property, plant and equipment (including in-vehicle devices).
(2) Includes amortization of intangible assets (including product development costs and intangible assets identified as
part of a business combination).
United States Dollar Six months Six months Three months Three months
Figures are in thousands unless otherwise stated ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Adjusted EBITDA 9,138 9,273 4,777 4,577
Add:
Decrease in restructuring cost provision 31 78 - 32
Less:
Depreciation(1) (3,285) (2,439) (1,773) (1,244)
Amortization(2) (1,863) (1,988) (887) (1,051)
Impairment of product development costs capitalized (10) - (10) -
Share-based compensation costs (469) (248) (218) (134)
Equity-settled share-based compensation costs (392) (248) (218) (134)
Cash-settled share-based compensation costs (77) - - -
Net (loss)/profit on sale of property, plant and
equipment and intangible assets (1) (8) 3 (8)
Transaction costs arising from investigating strategic
alternatives - (356) - (210)
Operating profit 3,541 4,312 1,892 1,962
Add: Finance income/(costs) - net 1,370 7,707 (442) 6,772
Less: Taxation (936) (4,026) 223 (2,984)
Profit for the period 3,975 7,993 1,673 5,750
(1) Includes depreciation of property, plant and equipment (including in-vehicle devices).
(2) Includes amortization of intangible assets (including product development costs and intangible assets identified as
part of a business combination).
5. Reconciliation of Adjusted EBITDA margin to Profit for the Period margin
Six months Six months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Adjusted EBITDA margin 17.0% 18.3% 18.0% 17.7%
Add:
Decrease in restructuring cost provision 0.1% 0.1% - 0.1%
Less:
Depreciation (6.1%) (4.8%) (6.8%) (4.8%)
Amortization (3.5%) (3.9%) (3.3%) (4.1%)
Impairment of product development costs capitalized (0.0%) - (0.0%) -
Share-based compensation costs (0.9%) (0.5%) (0.8%) (0.5%)
Equity-settled share-based compensation costs (0.7%) (0.5%) (0.8%) (0.5%)
Cash-settled share-based compensation costs (0.2%) - - -
Net (loss)/profit on sale of property, plant and
equipment and intangible assets (0.0%) (0.0%) 0.0% (0.0%)
Transaction costs arising from investigating
strategic alternatives - (0.7%) - (0.8%)
Operating profit margin 6.6% 8.5% 7.1% 7.6%
Add: Finance income/(costs) - net 2.5% 15.2% (1.6%) 26.2%
Less: Taxation (1.7%) (7.9%) 0.8% (11.5%)
Profit for the period margin 7.4% 15.8% 6.3% 22.3%
6. Net Cash
Net cash is calculated as being net cash and cash equivalents, excluding restricted cash less interest bearing
borrowings.
7. Specific Repurchase of shares from related party
On April 29, 2016, the Company entered into an agreement (the "share repurchase agreement") with Imperial Holdings
Limited ("Imperial Holdings") and Imperial Corporate Services Proprietary Limited ("Imperial Corporate Services"), a wholly
owned subsidiary of Imperial Holdings, to repurchase all 200,828,260 (25.01%) of the Company's shares held by Imperial
Corporate Services (the "repurchase shares") at R2.36 ($0.17) per repurchase share, for an aggregate repurchase
consideration of R474.0 million or $34.2 million (the "repurchase"). At the general meeting held on August 1, 2016, shareholders
of the Company approved the repurchase in terms of the JSE Listings Requirements and the South African Companies Act,
No.71 of 2008 ("Companies Act"). All of the conditions precedent were satisfied and the repurchase was completed on
August 29, 2016. Subsequent to the repurchase, the shares were delisted and now form part of the authorized unissued share
capital of the Company which results in the Company having 562,259,240 ordinary shares of no par value in issue at
September 30, 2016 (excluding 40,000,000 treasury shares held by MiX Investments).
The financial effect of the transaction is as follows:
Figures are in thousands unless otherwise stated South African United States
Rand Dollar
Aggregate repurchase consideration 473,955 34,188
Finance costs recognized in terms of IAS 39 (3,222) (232)
Fair value of liability on August 1, 2016 470,733 33,956
Transaction costs capitalized 2,949 213
Total share repurchase costs 473,682 34,169
8. Dividends Paid
The following dividends were declared by the Company during the period (excluding dividends paid on treasury shares):
- In respect of the fourth quarter of fiscal 2016, a dividend of R15.2 million ($1.1 million) was declared on May 24,
2016 and paid on June 20, 2016. Using shares in issue of 761,337,500 (excluding 40,000,000 treasury shares and
1,750,000 shares held in terms of the TeliMatrix Group Executive Incentive Scheme), this equated to a dividend of 2
South African cents or 0.1 U.S. cents per share; and
- In respect of the first quarter of fiscal 2017, a dividend of R15.3 million ($1.1 million) was declared on August
4, 2016 and paid on August 29, 2016. Using shares in issue of 763,087,500 (excluding 40,000,000 treasury shares), this
equated to a dividend of 2 South African cents or 0.1 U.S. cents per share.
9. Contingent Liabilities
Service agreement
In terms of an amended network services agreement with Mobile Telephone Networks Proprietary Limited ("MTN"), MTN is
entitled to claw back payments from MiX Telematics Africa Proprietary Limited in the event of early cancellation of the
agreement or certain base connections not being maintained over the term of the agreement. No connection incentives will
be received in terms of the amended network services agreement. The maximum potential liability under the arrangement is
R50.7 million or $3.7 million. No loss is considered probable under this arrangement.
10. Uncertain Tax Position
MiX Telematics International Proprietary Limited ("MiX International"), a subsidiary of the Group, historically
claimed a 150% allowance for research and development spend in terms of section 11D ("S11D") of the South African Income Tax
Act No. 58 of 1962 ("the Act"). As of October 1, 2012, the legislation relating to the allowance was amended. The amendment
requires pre-approval of development project expenditure on a project specific basis by the South African Department of
Science and Technology ("DST") in order to claim a deduction of the additional 50% over and above the expenditure incurred
(150% allowance). Since the amendments to S11D of the Act, MiX International had been claiming the 150% deduction
resulting in a recognized tax benefit. MiX International has complied with the amended legislation by submitting all required
documentation to the DST in a timely manner, commencing in October 2012.
In June 2014, correspondence was received from the DST indicating that the research and development expenditure on
certain projects for which the 150% allowance was claimed did not, in the DST's opinion, constitute qualifying expenditure
in terms of the Act. MiX International continues, through due legal process, to formally seek a review of the DST's
decision not to approve the expenditure. The process is ongoing. Consequently, at September 30, 2016, MiX International has
an uncertain tax position relating to S11D deductions. The Group has considered this uncertain tax position and
recognized a total tax asset of R10.6 million ($0.8 million) in respect of S11D deductions at September 30, 2016. Of this
amount, R8.5 million ($0.6 million) relates to the uncertain tax position while R2.1 million ($0.2 million) relates to
deductions in respect of development project expenditure which has been approved by the DST. If the Group is unsuccessful in
obtaining DST approvals on the balance relating to the uncertain tax position, the Group may not recover the R8.5 million
($0.6 million) raised and an additional taxation expense of the same amount may be incurred.
11. Provisions
During the period under review, the settlement of a supplier dispute resulted in an R8.6 million ($0.6 million) reduction in
provisions.
12. Other Operating and Financial Data
South African Rand Six months Six months Three months Three months
Figures are in thousands except for subscribers ended ended ended ended
September 30, September 30, September 30, September 30,
2016 2015 2016 2015
Unaudited Unaudited Unaudited Unaudited
Subscription revenue 607,511 556,668 301,337 284,878
Adjusted EBITDA 126,679 128,554 66,230 63,453
Cash and cash equivalents 346,873 934,529 346,873 934,529
Net cash 310,960 884,088 310,960 884,088
Capital expenditure incurred 146,638 105,952 83,808 68,867
Total development cost incurred 73,264 59,193 36,034 31,806
Development cost capitalized 40,337 30,425 21,028 18,892
Development cost expensed within administration
and other charges 32,927 28,768 15,006 12,914
Subscribers 584,994 541,346 584,994 541,346
United States Dollar
Subscription revenue 43,822 40,155 21,737 20,550
Adjusted EBITDA 9,138 9,273 4,777 4,577
Cash and cash equivalents 25,021 67,412 25,021 67,412
Net cash 22,430 63,773 22,430 63,773
Capital expenditure incurred 10,578 7,643 6,045 4,968
Total development cost incurred 5,285 4,270 2,599 2,295
Development cost capitalized 2,910 2,195 1,517 1,363
Development cost expensed within administration
and other charges 2,375 2,075 1,082 932
Subscribers 584,994 541,346 584,994 541,346
Exchange Rates
The following major rates of exchange were used:
South African Rand: United States Dollar
- closing 13.86 14.03 13.86 14.03
- average 14.53 12.53 14.06 12.98
South African Rand: British Pound
- closing 17.98 21.27 17.98 21.27
- average 19.99 19.31 18.46 20.11
13. Fair Value of Financial Assets and Liabilities Measured at Amortized Cost
The fair values of trade and other receivables, restricted cash, cash and cash equivalents, trade payables, accruals,
borrowings, bank overdraft and other payables approximate their book values as the impact of discounting is not
considered material due to the short-term nature of both the receivables and payables.
14. Subsequent Events
The directors are not aware of any matter material or otherwise arising since September 30, 2016 and up to the date of
this report, not otherwise dealt with herein.
15. Dividend Declared
On November 3, 2016 the Board declared in respect of the second quarter of fiscal 2017, which ended on September 30,
2016, a dividend of 2 South African cents (0.1 U.S. cents) per ordinary share to be paid on November 28, 2016.
The details with respect to the dividends declared for ordinary shareholders are as follows:
Last day to trade cum dividend Tuesday, November 22, 2016
Securities trade ex dividend Wednesday, November 23, 2016
Record date Friday, November 25, 2016
Payment date Monday, November 28, 2016
Share certificates may not be dematerialized or rematerialized between Wednesday, November 23, 2016 and Friday,
November 25, 2016, both days inclusive.
Shareholders are advised of the following additional information:
- the dividend has been declared out of income reserves;
- the local dividends tax rate is 15%;
- there are no Secondary Tax on Companies credits utilized against the dividend;
- the gross local dividend amounts to 2 South African cents per ordinary share;
- the net local dividend amount is 1.7 South African cents per ordinary share for shareholders liable to pay dividends
tax;
- the issued ordinary share capital of MiX Telematics is 602,259,240 ordinary shares of no par value; and
- the Company's tax reference number is 9155/661/84/7.
The details with respect to the dividends declared for holders of our ADSs are as follows:
Ex dividend on New York Stock Exchange (NYSE) Wednesday, November 23, 2016
Record date Friday, November 25, 2016
Approximate date of currency conversion Monday, November 28, 2016
Approximate dividend payment date Monday, November 28, 2016
16. Changes to the Board
With effect from June 1, 2016, Ian Jacobs was appointed as an independent non-executive director to the Board of
Directors.
With effect from August 18, 2016, Mark Lamberti and George Nakos (non-executive alternate director to Mark Lamberti)
resigned from the Board of Directors in accordance with the terms of the specific repurchase of shares from Imperial
Corporate Services (note 7).
With effect from October 3, 2016, Robin Frew was appointed Chairman of the Board of Directors and will continue to
serve as a member of the Remuneration Committee. Richard Bruyns, the outgoing Chairman, remains on the Board and was
appointed to the new role of Lead Independent Non-executive Director. Richard Bruyns will also take on the role of
Chairman of the Remuneration Committee.
17. Development costs historical data
The table below sets out development costs incurred and capitalized for each of the last eight quarters including the
period ended September 30, 2016.
South African Rand
Three months ended
Figures are in thousands (Unaudited) September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2015 2015 2015 2015 2014
Total development costs incurred 36,034 37,230 28,693 28,016 31,806 27,387 28,765 22,586
Development costs capitalized 21,028 19,309 12,136 16,308 18,892 11,533 18,621 11,967
Development costs expensed within
administration and other charges 15,006 17,921 16,557 11,708 12,914 15,854 10,144 10,619
United States Dollar
Three months ended
Figures are in thousands (Unaudited) September 30, June 30, March 31, December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2015 2015 2015 2015 2014
Total development costs incurred 2,599 2,686 2,069 2,021 2,295 1,976 2,075 1,629
Development costs capitalized 1,517 1,393 875 1,176 1,363 832 1,343 863
Development costs expensed within
administration and other charges 1,082 1,293 1,194 845 932 1,144 732 766
18. Taxation
As advised in our March 2016 Annual Report on Form 20-F as filed with the SEC, the Group's effective tax rate may be
impacted by certain non-deductible/(non-taxable) foreign exchange movements. This has had a significant impact on our tax
rate in the first six months of fiscal 2017. The impact of these foreign exchange movements and related tax effects is
shown below:
South African Rand Six months ended September 2016 Six months ended September 2015
Unaudited Unaudited
Profit for the period Foreign exchange gains Adjusted earnings Profit for the period Foreign exchange gains Adjusted earnings
Profit before tax 68,091 (11,496) 56,595 166,610 (103,138) 63,472
Taxation (12,973) (6,381) (19,354) (55,814) 34,442 (21,372)
Profit after tax 55,118 (17,877) 37,241 110,796 (68,696) 42,100
Attributable to:
Owners of the parent 55,130 (17,877) 37,253 111,120 (68,696) 42,424
Minority Interest (12) - (12) (324) - (324)
55,118 (17,877) 37,241 110,796 (68,696) 42,100
Effective tax rate 19.1% - 34.2% 33.5% - 33.7%
United States Dollar Six months ended September 2016 Six months ended September 2015
Unaudited Unaudited
Profit for the period Foreign exchange gains Adjusted earnings Profit for the period Foreign exchange gains Adjusted earnings
Profit before tax 4,911 (829) 4,082 12,019 (7,440) 4,579
Taxation (936) (460) (1,396) (4,026) 2,484 (1,542)
Profit after tax 3,975 (1,289) 2,686 7,993 (4,956) 3,037
Attributable to:
Owners of the parent 3,976 (1,289) 2,687 8,016 (4,956) 3,060
Minority Interest (1) - (1) (23) - (23)
3,975 (1,289) 2,686 7,993 (4,956) 3,037
Effective tax rate 19.1% - 34.2% 33.5% - 33.7%
Excluding the impact of foreign exchange gains and losses and its related tax consequences, the effective tax rate is
0.5% higher than the first six months of fiscal 2016.
Taxation receivable
The increase in the taxation receivable is primarily as a result of the prepayment of provisional tax in respect of
fiscal 2017 in certain South African subsidiaries.
Deferred tax liability
The decline in the deferred tax liability is primarily as a result of the effect of exchange rate movements.
For and on behalf of the Board:
RA Frew SB Joselowitz
Midrand
November 1, 2016
For more information please visit our website at: www.mixtelematics.com
Registered office
Matrix Corner, Howick Close, Waterfall Park, Midrand
Directors
RA Frew* (Chairman), SB Joselowitz (CEO), EN Banda*, CH Ewing*, SR Bruyns* (Lead Independent Director), ML Pydigadu,
CWR Tasker, AR Welton*, I Jacobs*
* Non-executive
Company secretary
Java Capital Trustees and Sponsors Proprietary Limited
Auditors
PricewaterhouseCoopers Inc.
Sponsor
Java Capital
November 3, 2016
Date: 03/11/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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